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J.B. Hunt Profits Increase

January 22, 2015

By Evan Lockridge

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J.B. Hunt Transport Services Inc. announced on Thursday increases in fourth quarter 2014 and full year net earnings.

It totaled $110 million, or 93 cents per share, in the final quarter of last year, compared to fourth quarter 2013 net earnings of $92 million, or 77 cents share. This was due to the increased operating income partially offset by higher net interest expense, according to the company.

For all of 2014 net earnings totaled $374.8 million or $3.16 per share versus $342.4 million or $2.87 cents per share for 2013.

Operating income for the most recent quarter increased to $182.9 million compared to $153.5 million for the fourth quarter 2013. The company said the jump primarily reflects higher revenue in all business segments and rapidly falling fuel prices during the quarter, net of lower fuel surcharge revenue primarily in its dedicated and trucking operations. They were partially offset by increased costs paid to hire and retain drivers, higher workers’ compensation, increased accident costs and higher costs of equipment ownership.

For all of 2014 operating income totaled $631.5 million compared to $576.7 million a year earlier.

Total operating revenue for the most recent quarter was $1.61 billion compared with $1.47 billion for the fourth quarter 2013. For all of 2014 it totaled $6.2 billion compared to $5.6 billion a year earlier.

Truck Segment

Truck segment revenue increased 6% to $96 million in the most recent quarter compared to a year earlier, primarily from customer rate increases and a 2% increase in fleet size. This resulted in operating income of $8.1 million compared to a operating loss of $1 million.

Revenue excluding fuel surcharges increased 10% mainly from increased asset utilization, intentional freight mix change and core customer rate increases of approximately 9% compared to fourth quarter 2013. At the end of the period the trucking segment operated 1,886 tractors compared to 1,857 a year ago.

Favorable changes from increased rates per loaded mile, rapidly declining fuel prices and higher utilization of company owned assets were partially offset by increased driver and independent contract costs per mile, increased hiring costs and higher safety and insurance costs compared to fourth quarter 2013.

Intermodal

Load growth of 6% in J.B. Hunt’s intermodal operation was the primary reason for a 5% increase in segment revenue totaling $958 million in the most recent quarter, but was hampered by what the company said was inconsistent rail service and limited dray fleet capacity during the quarter.

Operating income for the quarter grew 6% to $128.8 million. Benefits from customer rate increases, a smaller percentage of empty repositioning moves and a smaller percentage of outsourced dray usage were substantially offset by cost increases in rail and dray purchased transportation, driver recruiting and retention costs and insurance and claims costs. The current period ended with approximately 73,300 units of trailing capacity and approximately 4,700 power units in the dray fleet.

Dedicated

The segment’s revenue increased 10% during the current quarter over the same period 2013 to $363 million primarily from rate increases implemented during the past 9 months and more activity at customer accounts. Revenue excluding fuel surcharges increased 11% compared to the fourth quarter of 2013. A net additional 473 revenue producing trucks were in the fleet by the end of the quarter compared to prior year primarily reflecting new contracts taking effect in the current and prior periods.

Operating income was up 25% from a year ago, totaling $37 million. The increase is primarily due to higher revenue, improved asset utilization, less reliance on outsourced power units and rapidly declining fuel costs. It was partially offset by continued higher costs for driver hiring and retention, increased insurance and claims costs along with higher workers’ compensation costs.

Third Party Logistics/Brokerage

Integrated Capacity Solutions segment revenue increased by 36% to $197 million, mostly due to a 25% increase in load volume and a 9% increase in revenue per load.

Operating income increased 158% over the same period in 2013 to $9.1 million primarily from increased revenue and higher gross profit margin. Gross profit margin increased to 13.7% in the most recent quarter from 12.0% last year primarily from customer rate increases in contractual business and maintaining margins in the transactional business. Total branches at the end of the period grew to 29 from 24 at the end of 2013. ICS’s carrier base increased 13% and the employee count increased 16% from a year ago.

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